Agenda Attachment Letter to Plans for HIAC Meeting Provider

							(Agenda Attachment: Letter to Plans for 12/18 HIAC Meeting –
Provider Reimbursement presentation)

Ladies and Gentlemen

As the regular representatives of your respective health insurers at the Health
Insurance Advisory Council meeting I am requesting that you make the
necessary arrangements for the appropriate representative from your plan to
make a brief presentation to the advisory council at its December 18, 2007
meeting on your company's reimbursement methodology strategy for primary
care and hospital services in Rhode Island.

Background
Among other work, the Council this year will be looking at how insurers' actions
can effect the underlying cost drivers in the medical care system. The first area
of investigation was Health Information Technology. The second will be provider
reimbursement strategies.

There is ample evidence that in medical services “behavior follows
reimbursement” – i.e. providers adjust behaviors to maximize revenue, based on
incentives in whatever payment system is used. In the arena of physician
services, increased use of a fee for service system put in place by Medicare has
generally been accepted to have resulted in incentives towards
   - high volume services
   - high volumes of services and
   - services that are profitable under Medicare’s Resource-based Relative
       Value Scale methodology (notably those with significant technical
       components, and diagnostic imaging)

Similarly, incentives are not in place for
   - Services that demand high levels of cognition, counseling or collaboration.
   - Rewarding high value care (quality and or efficiency).
   - Services that promote or maintain health.

In the area of hospital payment, recent work in Rhode Island by the Governor’s
and Lieutenant Governor’s Community Hospital Task Force documented the wide
variety in payment methodologies and payment levels among payers and the
poor and mixed incentives they produce for Rhode Island’s hospitals.

Many experts see payment reform as being critical to improving the efficacy of
our medical system, but public activities to promote this through purchasing,
payment and regulation has been mixed. The Office of the Health Insurance
Commissioner has a statutory responsibility to direct health insurers towards
policies that promote improved medical system access, quality and efficiency.
Clearly, the way health plans pay for services that are considered a high public
value – in the case primary care and inpatient care – have great effects on the
medical care system in Rhode Island.


Goals of the Presentation
Members of the Council would like health plans to answer the following
questions. For both primary care and inpatient hospital services:
       1. What is your dominant payment methodology? (e.g. capitation, fee for
          service, case based etc.). What is its analytical basis (e.g. Medicare,
          historical experience etc.) What sorts of provider responses do those
          payment methodologies incent?
       2. What are your current and future plans to implement primary or
          supplemental payment systems that incent improved medical care
          quality and/or efficiency?
       3. What are the main barriers - regulatory, technical, contractual and
          perceptual – to implementing those changes?
       4. Comment on the merits and drawbacks of standardization or
          consistency of payment incentives across payers.

The results of the presentation and discussion will inform Council members as
they advise OHIC on policies to work with insurers to improve the affordability
and quality of medical care in the state.


Details
   - The presentations should be no more than 20 minutes in length, to allow
        for Council questioning after all presentations are made. A laptop
        computer and projector will be available for your use. We ask the
        presenters be people who are best able to answer the above questions.
   - The discussion is about payment methodologies not amounts. No
        specific payment rates should be discussed and the conversation will be
        moderated such that there will be no topics that could potentially be
        construed as relating to the restraint of trade. The Council believes these
        questions are framed in way so as to avoid the disclosure of proprietary
        information.
   - HIAC meetings are open to the public. Public comment is taken at the
        discretion of the chairs. This meeting will be publicized in a matter
        consistent with the Council’s monthly meetings.

Please contact OHIC staff if you have further questions. Thank you for your
efforts on behalf of the Council in this matter.